If you go to the Supreme website and scroll your cursor over the items, you’ll immediately notice the overwhelming majority of items are sold-out. And when you finally find an item not sold out, you’ll notice the item is grossly overpriced, with T-shirts costing over 40 dollars each and sweatshirts over 400 dollars each (and even bricks at over a hundred dollars each). So why is Supreme so successful if the products the company sells are always sold out and always overpriced?
The answer is that being sold out and being overpriced is part of Supreme’s genius marketing plan. Unlike other companies, Supreme doesn’t spend much of their budget on widespread advertising, instead preferring to appeal only to their core consumers of young, urban skaters. This exclusivity fosters envy from those outside the Supreme demographic as well as creating a cult-like following for those within the demographic, both of which add to the hype of the brand. Using this “high demand, low supply” business model, Supreme manages to encourage consumers to pay their ridiculous high prices before items are sold out and never produced again. In fact, Supreme products resell at over 1,200 percent of their retail price!
Supreme isn’t the only company that manages to capitalize on exclusivity. In fact, many companies, including Starbucks, also make their products more desirable by offering limited edition items. Think about all the limited-edition Frappuccinos Starbucks continuously churns out. It’s not that consumers really need another overpriced sugary drink, but the exclusivity of the limited-edition Frappuccino makes it a desirable novelty item.
Exclusivity is a fundamental factor that influences consumers’ purchases. It may not be rational to buy a 400 dollar Supreme sweatshirt, but the idea of not being able to buy that sweatshirt after it’s sold out and the thought of owning an item that not everyone can buy can be compelling enough reasons for a consumer to make an irrational choice.
I strongly agree that Supreme appears to be an "exclusive" brand, primarily attracting those who can afford and are will to buy their overpriced apparel just for the logo. Even though you could easily buy a similar shirt or sweatshirt at other brands for a fraction of the cost, I think we as consumers like to be in on something that sets us apart from everyone else and ultimately shows our status. It is interesting that you relate the Supreme brand to limited edition Starbucks drinks because even though those drinks are affordable and anyone can buy them, it makes us feel special when ordering the drink because we want to buy one before they are never made again.
ReplyDeleteI think the point you bring up about the items constantly being sold out is very interesting. In the past week we spent a lot of time looking at supply and demand curves. The equilibrium point is supposedly the most efficient point for both buying and selling, yet Supreme has a different marketing plan. The idea that their items are always in shortage helps their rarity scheme. It's interesting that Supreme chooses to be "inefficient" with their business plan. It is scary to think how much more money they could make if they chose to manufacture just a few more items considering so many people would pay those crazy amounts of a single t-shirt or hoodie.
ReplyDeleteI think exclusivity is a large factor in the purchase of products. I personally have talked to people who have explicitly told me how they bought an item because they didn't want to not have it when everyone else did. I think it is a really smart way of handling business.
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